Pakistan’s technology sector is experiencing a sharp contraction, with global tech companies scaling back their presence and startup funding plunging by 88%, weakening the digital economy during a critical growth phase.

Over the past year, several international firms have withdrawn, citing regulatory uncertainty and economic instability. This exodus contributes to a stark decline in venture capital flow, with funding falling from $500 million to under $60 million annually. As a result, many startups face closure, slow hiring, and delayed product development.

Tech leaders warn that this downward trend risks eroding Pakistan’s innovation ecosystem, threatening job creation and global competitiveness. The funding freeze directly hinders cutting-edge work in fintech, e-commerce, AI, and software development.

To counter this decline, experts recommend immediate action:

  • Incentivize investment through tax reliefs, easier foreign capital access, and streamlined approval processes.
  • Implement digital reforms, including clear regulations on data privacy, cloud services, and e-payments.
  • Strengthen accelerator programs and public-private partnerships to support early-stage startups.
  • Improve infrastructure, especially broadband connectivity and access to affordable cloud platforms.

Reviving digital confidence will also require Pakistan to promote success stories, restore investor trust, and commit to long-term planning. Without decisive action on policy and funding, the country risks further marginalization from the global tech landscape.